Abstract: Impact of Employee Training on Firm Performance in

Pakistan (Small and Medium Enterprises)

Companies today are forced to function in a world full of change and

complexity, and it is more important than ever to have the right employees in order to

survive the surrounding competition. This study aims to exploring and understanding

dimensions of employee training program on job satisfaction in Pakistan,

Like Small and Medium Enterprises. As the primary focus of the study is on exploration

so the proposed study will use sequential exploratory design based on the mixed method

approach in which first phase is qualitative in, HRM Practices and

job satisfaction whereas the second phase is quantitative.

Introduction and Background

Over the past one and half decades, various arguments have been made that firm’s human

resource may be its sole source of sustainable competitive advantage (Ferris et al, 1999).

We extend this idea by arguing that if innovation is the education and, especially, training

is the ammunition that renders it useful and effective. Research indicate that inadequate

and inefficient management of employee in small firms has resulted in low productivity

and high turn over rate and one of the leading causes of small firm failures (Mc Evoy,

1984). The resource based approach contends that organizations can develop a sustained

competitive advantage only if its activities create value in a unique way, one that

competitors cannot easily copy (Barney, 1991; 1995).Employee Training Program

increase performance of both organization & individuals. This study will address one
specific aspect of human resource management, training, to see if the presence and type

of training offered by Pakistan SMEs impact operations and profitability.

Purpose Statement

This Proposal is designed for the purpose of investigate the impact of training on firm

performance for registered, private, manufacturing SMEs in Pakistan. No studies

currently exist on the relationship between SME firm performance and employee training

practices in Pakistan. The results of this study should help Pakistani managers determine

whether tight financial resources should be expended on training programs or if the funds

could be better utilized elsewhere within the company.

The aim of the study is implementing HRM practices like Training Program in Small and

Medium Enterprises for the purpose of employee’s development as well as firm

performance. Therefore, purpose of this two phase, sequential mixed methods study will

be, to explore viewpoint about Training Program and performance of the firm using

Semi-structured interview. This will be better to understand a research problem by

converging both quantitative and qualitative data.

Objectives of the study:

The main objective is to increase the understanding regarding employee’s training and

development in relation to firm's performance.

1. To explore the importance of employees training program in small and medium

enterprises in Pakistan and see as good, bad or acceptable performance.

 2. To explore the perception of employers in small and medium enterprises about the

training program.

3. To explore the employee training contributes to their performance. To explore why

training is important for employees and firm performance.

Significance of the Study

The present study will be significant in number of ways. It will contribute to the body of

knowledge by:

1. Firstly, since the present area is highly under

researched in Pakistan. No study has been found to

explore the employees training in Small and Medium

Enterprises of Pakistan. Therefore, the present study

assumes that the findings of the present study will help in

implementing that study in SMEs Sector of Pakistan and

those in developing countries in general to answer the

long standing question of how to enhance employee and

firm performance.

2.Secondly, no research has been found on employee

training and firm performance in Small and Medium

Enterprises in Pakistan. Therefore, the present study will

prove to be a significant contribution in this area with the

assumption that employee training program is important

for the individual and firm over all performance.

Employing mix methods research which has not been

 used in this area and hence this will be a significant

methodological advancement.

3. Examining the applicability of the discussed Western

concepts and theories in an Eastern developing country

(Pakistan) in order to develop of these concepts.

Research Question:

For the first phase which is qualitative in nature following are the proposed research

questions.

(Main question)

Impact of Employees Training on Firm Performance in Pakistan

(In Small and Medium Enterprises).

(Sub questions)

1. What are the employee experiences about relevant training and development

program and how they feel about that?

2. How do employees perceive about their own performance and what they perceive

as good, bad or acceptable performance?

3. What are the employee’s opinions about firm that contribute to their

performance?

In a two-phase, sequential study in which second phase (quantitative) depends on the

result of the first phase (qualitative), it is difficult to specify the questions asked in second

phase at the time of proposal writing.

Impact of training and development on firm's

performance
Literature Review
My study is about impact of training and development on

Firm's performance.. What will be effect of training and development on employee's on

Firm's performance? If the organization provides training and development to his

employee's then employees will satisfy with organization or not. This topic should be

added to the pool of research knowledge available on this topic. It will include the

knowledge with more research. Purpose of the literature is actually reviewing the other

study. It will provide the stage to check the importance of the study.

This study focus on training and development..

organization's performance depends on training and development. Present day companies, just

like the companies in the past, strive to maximize their profit and increase proficiency by

finding the time and resources to train their workforce. The organization shall: a)

determine the necessary competence for personnel performing work effecting product

quality. b) Provide training or take other action to satisfy these needs. c) Evaluate the

effectiveness of the actions taken. d) Ensure that is personnel are aware of the relevance

and importance of their activities and how they contribute to the achievement of the

quality objectives. e) Maintain appropriate records of education, training, skills

andexperience”.This standard requires that the organization identify competency needs

for all personnel whose activities affect product quality. This task will include a large

majority of the organization. Assessments of the training must be conducted and records

must be maintained and easily accessed. These two elements are describing the minimum

requirements for establishing an effective training system.

 The main purpose of this study

was to identify a more efficient and effective way to manage the Job Specific Training

and development system. It is very important when developing a team that everyone is

committed to the issue at hand and this will be only when a organization's workforce will

be trained. Without key factors, it would have been difficult to implement the training

and development system in an organization and it may not have been as successful in an

organization.

There were many positive outcomes of training and development. Effective

Implementation was limited, as the training and development were not integrated within

the culture and process of the organization. Staffs generally rate such training as a high

priority (Raynes and Sampson, 1987; Sturmey, 1992). The main purpose is to increase

the understanding regarding organization's performance in relation to training and

development. The other factors are remuneration and elements such as participation,

feedback, fairness, responsibility, the theoretical framework includes training and

development, financial as well as non-financial remuneration and research done in later

years regarding participation, feedback, fairness, responsibility, development and

Work-atmosphere connected to organization's performance..

Companies today are forced to function in a world full of change and complexity, and it

is more important than ever to have the right employees in order to survive the

surrounding competition. New companies and business are blossoming, new technologies

are constantly developed and the knowledge and perception of how much your

employees actually mean to your organization is greater for every day. Most companies

are looking for the right expertise in different areas, and human resources are therefore an
important competitive factor that needs to be taken into consideration while managing

business (Ljungberg & Larsson, 2005).For this most of the companies arrange training

and developments for their employees.Organisations have to balance both production

effectiveness as well as efficient workforce to be successful. Even though a company has

managed to find the right employees, this is not enough. A crucial factor is to make

employees best and reduce the turnover rate.

Talented employees can be a source of

advantage for an organization (Siegler (1999), but how to achieve this may be a major

challenge. What do employees want from their organization in order to feel committed?

The answer is they need security of their future that is only with the training and

development. The primary reason for working is to obtain money (Jackson and Carter,

2007), but could employers do more in order to retain their employees? Or even more

important, what do employees want from their employer in order to feel committed

willing to stay? Since there may be a difference between how employers try to give

employees regarding to how employees actually would prefer to be stay their and satisfy

with the job.

Throughout research we find indications that training and development is a

major element for firm, performance. Job satisfaction is affected by the worker and the

work itself (Chen, 2008). In older literature the focus has been on the relationship

between training and development and job satisfaction as well as remuneration. In the

1940’s, 1950’s and 1960’s several studies were made (Ohio, Michigan and the Hi-Hi

leader).Employee’s satisfaction builds on elements such as a higher participation,

feedback, fairness, responsibility, development and work-atmosphere (Hytter, 2007). It is

important that employers give access to relevant development. The personal need is less

important in this case and rewards is not that necessary, which is quite the contrary to

what Shields (2007) and

Hansson (2002) describes. They say that reward is necessary to make development

function. Could it be that way that employee thinks that development is a kind of reward

itself that Shields (2007) describes as extrinsic reward. They think that training and

development is better for job satisfaction. It is obvious that satisfaction with possible

future career development and satisfaction in current career development are

of importance for employee. The result in relation to previous research adverts at the

importance in giving employees possibility to develop (Tobia, 1999). We could see that if

an employee felt satisfaction with his or hers work, he or she was taking training and

development from the company. Mitchell etal (2001) describes the importance of

satisfaction in relation to training and development. They discovered a connection

between satisfaction and training and development; According to us companies have to

improve their training and development level through making employees feel job

satisfaction. This issue must be one of their main objectives because it increases the

possibility to handle competition in the market. By having competent employees

companies may save a lot of money which also is important throughout business

administration.According to the survey there is a correlation between job satisfaction and

training and development. If the employee feels appreciation because he thought that

company give training and development for the betterment of his career he will satisfy

from the job. Employee development and training are two important elements especially
if combined with performance-related job satisfaction to create a good work group there

has to be a good working envoirment. This arises when group members feel trust and

confidence and as a result they treat each other with respect and this may only because of

training and development.

The training and development applications should be useful to

industrial personnel in preparing them for delivering improved performance on the job.

The applications will help them understand the options and the impact of decisions.These

applications have the potential to improve industry performance by reducing the learning

curves of the workforce

.
Staffs of the Training and Development Unit are available to assist managers or

individual staff to identify training needs and can advises on appropriate ways to meet

identified needs. These include mentoring, coaching, attendance at an internal or external

course, or completion of a qualification. Any staff member may contact TND staff

directly for confidential advice, and assistance can be provided on a one-to-one basis.

All training must be related to the mission and

performance goals. The selection of employees for training is made without regard to

political preference, race, color, religion, national origin, gender, marital status, age,

disability, and with proper regard for their privacy and constitutional rights as provided

by merit system principles set forth in 5 U.S.C. 2301(b)(2) (1996).

A full range of options may be used to meet mission-related organizational and employee

development needs, such as classroom training, on-the-job training, technology-based

training, distance learning, self-development activities, coaching, mentoring, career

development counseling, details, rotational assignments, cross training, and

developmental activities at retreats and conferences. Government and non-government

training facilities may be used. (Prior regulatory constraints regarding use of non

government training facilities and time restrictions such as 1 year in 10 have been

eliminated. 5 U.S.C. 4107(a) (1996) prohibits training to obtain an academic degree in

order to qualify for appointment to a particular position or for the sole purpose of

providing an opportunity to an employee to obtain one or more academic degrees.

Training for employees who report to them. Training involving the acceptance of a

contribution, award, or payment (in cash or in kind) of travel, subsistence, and other

expenses. Academic degree training to relieve recruitment and retention problems in

occupations in which the agency has or anticipates a shortage of qualified personnel.

An Individual Development Plan (IDP) is a written plan

used to systematically identify and record appropriate training and development activities

that enhance an employee’s performance in a current or projected future assignment. All

employees and supervisors must complete or update an IDP each year within 30 days of

the annual performance appraisal. The IDP should include input from both the employee

and supervisor. Using the IDP form designated by their agency, REE employees and

supervisors should record the following: identified developmental needs, activities

proposed to meet the needs, dates of the activities, and any direct costs required to meet

the needs (tuition, travel, materials, etc.).

Other research demonstrates the impact of

training

on outcomes other than job performance or on variables that serve as antecedents to job
performance This study related organizations’ training policies (e.g., functions assumed

by the of training, and how training is valuated) with four types of organizational-level

benefits: employee satisfaction, customer satisfaction, owner/shareholder satisfaction,

Benefits of training have been documented for variables other than organizational

performance training methods. Several studies in each of these two domains provide

information on Research on training design and delivery can be categorized into two

general themes: research on new approaches to engage learners in meaningful learning

processes and research on specific how to maximize the benefits of training. Researchers

are also exploring the impact of novel training technologies on outcomes other than

learning. Research on moderators of the training transfer relationship has focused

primarily on workgroup factors. The organizations that are able to realize the benefits of

training that are documented in this review are able to move away from viewing the

training function as an operational function or cost center to one that is value driven We

take the point of view that training leads to important benefits for individuals and

teams, organizations, and society

Managers and other decision makers in these

organizations prefer information and data on business-related results to make decisions

about how to allocate resources, including resources for training activities (Mattson

2005). Training for the sake of training, an approach that focuses on developmental ideals

and supportive organizational environments, is not aligned with today’s business realities,
\
including compressed career progression pathways, budgetary cuts and constraints,

highly competitive environments, and market-driven economic philosophies

McGuire et al. 2005). Designing, delivering, evaluating, and clearly documenting the
benefits of training using the information included in this review will allow the human

resource management function to be a strategic, organizational player and to move away

from the negative connotations (e.g., “welfare secretaries”) associated with this function

in the twentieth century (Hammonds 2005, Jacoby 2004, Kraiger et al. 2004

Methodology:
Mixed approach:
The most important thing in the selection of approach is the nature of research problem as
my research problem is twofold in nature. So I have decided to choose mixed methods

research approach as to accommodate my first objective of exploring and understanding

the complexity of the variances in of Pakistan. The theoretical framework includes

leadership and leadership style, financial as well as non-financial remuneration and

research done in later years regarding participation, feedback, autonomy, fairness,

responsibility, development and work-atmosphere connected to training and

development.

Furthermore this decision is supported by the availing the merits and overcoming the

demerits of both approaches as discussed by Creswell (2003), methodological changes

that improve the study and strengthen findings as well as collecting diverse types of data

best provides an understanding of a research problem.

Abraham, Rebecca (1999) The relationship between differential inequity, job satisfaction,

intention to turnover, and self-esteem.

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